For a firm in a perfectly competitive market, if it is producing at a level of output where marginal costs are less than marginal revenue it:
A. is producing a profit-maximizing quantity.
B. should invest more in advertising in order to raise revenues.
C. should cut back production to increase profits.
D. should increase production to increase profits.
Answer: D
You might also like to view...
What is the error in the following argument? "An increased sales tax on gasoline won't reduce consumption, because while the higher price will at first reduce demand, the reduced demand will eventually bring the price back down again, and consumption
will return to its former level." A) A higher price doesn't reduce demand. B) A reduced demand does not cause lower prices. C) The tax-induced price increase may be greater than the price reduction due to the lower demand. D) the tax-induced price increase will necessarily be greater than the price reduction due to the lower demand, because demand is never perfectly inelastic. E) The ultimate effect on consumption may be to increase it beyond its original level.
The XX schedule shows how much
A) fiscal expansion is needed to hold the current account surplus at X as the currency is devalued by a given amount. B) monetary expansion is needed to hold the current account surplus at X as the currency is devalued by a given amount. C) fiscal expansion is needed to hold the current account surplus at X as the currency is evaluated by a given amount. D) fiscal and monetary expansions are needed to hold the current account surplus at X as the currency is devalued by a given amount. E) foreign funding is needed to hold the current account surplus at X as the currency is devalued by a given amount.
When price is greater than average variable cost but less than average total cost at the profit-maximizing level of output, a firm should:
A) continue to produce the level of output at which marginal revenue equals marginal cost. B) increase output to minimize its losses. C) reduce output to the level at which price equals average variable cost to minimize its losses. D) shutdown to minimize its losses.
Numerically, the dominant type of business enterprise in the United States is
A) the corporation. B) the partnership. C) the proprietorship. D) the multinational corporation.